First Investment Property: $600/mo Cash Flow!!!

[Kyle Hendrix]

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Youngstown.

Purchase price: $67,500
Cash invested: $21,000
Sale price: $67,500

Purchased this Duplex for $67,500 using conventional 25% down from a Mortgage Lender. Property was found off market from a seller looking to retire. Duplex had immediate cash flow as there was already 2 long term renters in there, and after careful evaluation by the Property Management company we found that the units were both $150 under market rent. We are in the process of raising rents from $475 to $625, which would bring the cash flow up to $600 after expenses. What a deal!

What made you interested in investing in this type of deal?

A few years back, I looked at my personal finances and was sick of the mess I had created. I was in Student Loan debt, car payment, credit card debt, and I was in no position to invest! I got very serious and cut back on a lot of the things I used to do (Dave Ramsey style). After about 18 months of hard work, I was able to pay off my credit cards, my car, and used the rest of the money I accumulated to purchase my first Investment Property. Just the first step to financial freedom!!

How did you find this deal and how did you negotiate it?

Seller found us; he was looking to retire and did not want to deal with his 10 properties anymore. He found my investment partner as he was working on another house and had asked if he would be interested in buying. My business partner brought me in as the financial investor and we purchased the property relying on the expertise of our Real Estate Agent to negotiate. Appraisal came in $1,000 over purchase price so both parties felt it was a fair deal.

How did you finance this deal?

Mortgage Lender. Very easy and simple process!

How did you add value to the deal?

This property was turnkey so no rehab needed to be done. However, we added value by bringing in a professional property management company which will allow us to raise rents.

What was the outcome?

Raising rents from $475/mo to $625/mo. Total = $1250/mo. Expenses including PITI ($363), Property Management ($125), Landscaping ($37), Water ($125) = $600/mo Cash Flow!!!

Lessons learned? Challenges?

First one is always the hardest! Learned how the home buying process works and how easy Real Estate Investing can be with the right team around you!!